FG May Withdraw Electricity Subsidy as Debts Mount, Warns Sam Amadi
A former Chairman of the Nigerian Electricity Regulatory Commission (NERC), Dr. Sam Amadi, has warned that the Federal Government may be forced to withdraw electricity subsidies if it continues to accumulate unsustainable debt levels in the sector.
Amadi made this known during an interview on Sunrise, a Channels Television programme, aired on Saturday morning. He said that while subsidy remains a critical tool for cushioning the economic burden on electricity consumers, persistent fiscal pressure could compel the government to reconsider its subsidy stance.
“Yes, the Federal Government would likely do that remove the subsidy on electricity,” Amadi stated. “If some states are bragging that, ‘Oh, our tariff is low, we are doing better,’ the Federal Government, as the fiscal authority, can become envious and say, ‘Why should we be the ones looking bad by owing?’”
Although he acknowledged the possibility of subsidy removal, Amadi cautioned that such a move might be ill-timed given current economic realities.
He argued that subsidy, when well-targeted and managed, is a legitimate economic strategy, even among developed nations.
“There’s a big, emotive debate. Most economists just take the ideological view that subsidy is bad. That’s not true,” he said. “Subsidy is always part of the market. The real question is: how do you provide a subsidy, where do you place it, and for what purpose?”
Citing global examples, Amadi noted that many Western countries, including members of the European Union, Canada, and the United States, use subsidies to facilitate energy transitions or protect citizens from market shocks.
He highlighted Ontario’s extensive subsidies during its renewable energy transition as a case in point.
“Look at Europe, look at the EU. They are heavily subsidising energy because of the crisis in Russia and Ukraine or due to the transition from one energy source to another,” he explained.
Amadi emphasized that Nigeria must define a clear framework for its electricity subsidy regime identifying the scale, beneficiaries, and strategic goals rather than operating on vague fiscal grounds.
He also expressed concern about the effectiveness of regulatory oversight and the prevalence of corrupt practices that undermine service delivery and tariff fairness in Nigeria’s electricity sector.
His comments come amid growing speculation about the Federal Government’s ability to sustain energy subsidies following mounting liabilities and fiscal strain.
Recent reports suggest that Nigeria may owe significant sums to electricity generation and distribution companies under the subsidy framework.
As the power sector continues to grapple with inefficiencies, consumer dissatisfaction, and liquidity challenges, Amadi’s remarks have reignited public debate on the sustainability, structure, and future of electricity subsidies in the country.
